Financial planning for everyone at any time

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Getting started

There may be times when you may not have much money—but an abundance of time. That is is incredibly valuable. Take the time to understand the importance of living within your means, establishing good credit and getting a jump on retirement savings. When you do, you’ll be taking the most important steps to ensure your financial future.
Don’t let your current income - small or large - keep you from establishing the basics.

You should set aside enough cash to cover your essential expenses for three to six months. Put it in a safe, relatively liquid account like a short-term certificate of deposit (CD) or money market fund.

If you stick with that 10% during your working years, you’ll likely be in good financial shape come retirement. (At this point in your career, a Roth IRA or Roth 401(k) may make the most sense.) short-term certificate of deposit (CD) or money market fund.

Seven in 10 college seniors who graduated in 2012 had average student loan debt, of $29,400 and about 9 % of what is owed in past due 90 days. Be different and buck the trend and stay on top of your loans. You’ll be in much better shape down the road. A strong credit history is essential when you’re ready to purchase a new car or your first home.

Enroll in comprehensive health insurance.Charge only what you can afford to pay off each month.

If your employer doesn’t offer medical benefits, shop around for the best plan. Good health coverage is a must, no matter what your age.

Make a budget and stick to it. Also, do yourself a favor by setting up automatic payments for savings and regular bills.

When is a good time?

Increasing responsibilities

For many people, financial responsibilities start to mount in their 30s: marriage, kids, homeownership and retirement savings. Can you manage it all? Yes, if you prioritize.

Carrying credit card or other high-interest non-deductible debt is one of the biggest mistakes you can make. Not only are you wasting your money on a potentially high interest rate, but you’re also undermining your ability to borrow money at a reasonable rate in the future. The Federal Reserve found that 38% of all households carry a balance on their credit cards, with the average balance coming in at $5,700.3

Never, ever walk away from your employer’s retirement match, if offered. And if you didn’t begin in your 20s, you need to save 15–20% of your annual salary starting now. After that, you can direct your savings toward a home down payment, a child’s college education or another long-term goal.

Invest for growth.

Open investment accounts and choose investments that offer you an opportunity for growth. Investing doesn’t have to be complicated—exchange-traded funds and index mutual funds can be a good start—but you do have to be in it for the long term. en you’re ready to purchase a new car or your first home.

Invest for growth.

Protect yourself and your family

Now that you have more money working for you, make sure you’re protected. Look into disability insurance and consider life insurance if you have dependents.

Invest for growth.

Make sure your asset allocation is in line with your risk tolerance and goals. Look for the Riskalyze app on this site for guidance.

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Invest for growth.

Start your estate plan

At the very minimum, you should establish a will that names a guardian for your children. You should also make sure you name beneficiaries for all retirement accounts, as these designations will take precedence over your will.

40s

Focus:​Financial Fitness

Financial planning in our 40s

Salaries may be growing, but so are the pressures: family, bills, and on and on. It’s easy to get distracted. But you have to stay focused—now more than ever.

Double down on savings. No matter what, keep retirement at the top of your priorities. If you haven’t started saving, try setting aside 25% of your salary. It’s a chunk of money, but it only gets more difficult if you wait.

A net worth statement. Having a net worth statement that lays out your assets and liabilities will give you a “big picture” perspective on your finances as well as a benchmark against which you can measure your progress.

Take a fresh look at your long-term goals. These may include a second home or early retirement. Crunch the numbers to see what it will take to reach them.

Disability insurance. If you don’t already have it, now is a good time to look into disability insurance. According to the Council for Disability Awareness, the average worker has a 20–25% chance of becoming disabled for three or more months at some point during his or her working career.

​content credit: Charles Schwab

content credit: Charles Schwab

As you approach the peak, it’s smart to start looking at the other side. Retirement may be 15 or more years away, but it’s not too early to home in on specifics.

Estimate retirement expenses and income sources.​Will you move to a new home or a new community? Travel? Work part time? Whatever you envision, it likely takes money. So back up your plan with real numbers, and be sure to factor in Social Security benefits.

Stay on top of your portfolio, focusing on performance, risk and expenses. Review your investment portfolio and decide when (or if) you should shift to a more conservative asset allocation.

Know your tax profile. Understand how taxes fit into your financial picture, now and in the future.

​​Consider long-term-care insurance. Now’s a practical time to think about it.

Update your estate plan. Make sure your will and beneficiaries are up to date and your assets are appropriately titled.

Focus on the details of life after work.

Decide when to take Social Security.

Many people file for Social Security too early, leaving thousands of dollars on the table. Remember, the longer you wait up to age 70, the bigger your check once you begin collecting—so it pays to do some calculations.

Sign up for Medicare.

​Unless you’re still working, you must sign up by age 65 or face a penalty. Medical costs can be a big part of retirement expenses, so look into a supplemental policy, as well.​​

Consider gradually moving to a more conservative asset allocation, but don’t walk away from growth—retirement can last a long time!

Putting it all together​Protect yourself and your family.

Putting it all together

content credit: Charles Schwab

Now that you have more money working for you, make sure you’re protected.

Look into disability insurance and consider life insurance if you have dependents.

Start your estate plan. At the very minimum, you should establish a will that names a guardian for your children. You should also make sure you name beneficiaries for all retirement accounts, as these designations will take precedence over your will.

The road to financial well-being lasts a lifetime, so take it step by step, year by year, decade by decade, checking in with an investment professional on a regular basis.

And try not to lose sight of your biggest goal of all—having a challenging and fulfilling life!